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Essar group to keep away from listing

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Rules out putting up power project in South India.

Mr Sashi Ruia (left), Chairman, Essar Group, and Mr T.S. Narayanasami, Chairman and Managing Director, Bank of India, at the inauguration of Essar Steel’s service centre facility at Oragadam near Chennai on Saturday. —
Mr Sashi Ruia (left), Chairman, Essar Group, and Mr T.S. Narayanasami, Chairman and Managing Director, Bank of India, at the inauguration of Essar Steel’s service centre facility at Oragadam near Chennai on Saturday. —

Our Bureau

Chennai, March 21 Essar Steel has been delisted. Essar Oil and Essar Shipping and Logistics will soon be. The Essar group, as a matter of policy, will go private and none of the group companies will be listed on the stock markets, says Mr Shasi Ruia, Chairman, Essar group.

In an informal chat with journalists on the sidelines of the inauguration of Essar Steel unit at Oragadam near Chennai, Mr Ruia said he did not want to go into the reasoning behind the philosophy.

He said that the group, in any case, would not need to raise funds now. All projects of the group (expansion of Essar Oil’s Vadinar refinery, mining and steel making projects at Minnesota, USA and the Caribbean) have been put on hold, “until some clarity emerges on the demand”.

Mr Ruia, however, said that the group is “aggressive” in acquiring oil assets abroad. Right now, Essar is drilling two wells in Myanmar – one onshore and the other offshore – and “God willing, there should be some good news in a month.”

He ruled out putting up a power project in South India, feeling that it is not wise to run a power project depending upon imported coal – because of the unpredictability in coal prices and fluctuations in exchange rates.

Hazira expansion on

While the group may be going slow on other projects, the expansion of Essar Steel’s capacity at Hazira is very much on.

The plan is to raise the capacity from 4.6 million tonnes a year to 9 million tonnes. The expansion would be completed in a year, Essar Steel officials said.

‘Service centre’ at Oragadam

Essar Steel today formally inaugurated its ‘service centre’ at Oragadam. The facility has been put up at an investment of Rs 75 crore.

Hot-rolled and cold-rolled coils would be brought to the centre from Essar’s steel mill in Hazira. The machines at the centre will cut the coils into different sizes as desired by the customers.

Thus, what gets delivered to the customer is a slightly value-added product. Essar Steel hopes this would help in retaining existing customers and attracting others.

Essar’s major customers around Chennai are the automobile and auto components manufacturers.

These customers would benefit by getting a product ready to be put into the presses for making components such as doors and wheels.

In the absence of this facility, either the customers would have to buy the coil and cut it themselves, or outsource cutting.

The plant inaugurated today can process 2,50,000 tonnes of flat steel each year. The unit kicks-off with an order for processing 10,000 tonnes of steel, worth Rs 30 crore.

Asked if Essar Steel would go further down the value chain and make, for instance, pressed components, Mr Vikram Amin, Executive Director – Marketing and Sales, Essar Steel, said that such a step would be considered at a later stage.

(This article was published in the Business Line print edition dated March 22, 2009)
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